German chemical giant Bayer is to sell its Animal Health business unit to US-based Elanco in a deal worth $7.6 billion (£6.28bn).
The deal will create the world's second largest maker of medicines for pets and livestock.
The exit of the Animal Health business marks the largest transaction in the series of portfolio measures initiated by Bayer in November 2018.
It comes as the German company looks to reduce debt from its $63 billion takeover of Monsanto and a potential settlement of lawsuits over an alleged cancer-causing effect of weedkiller Roundup.
The divestment is expected to be concluded in mid-2020 subject to the satisfaction of customary closing conditions, including antitrust clearance. Bayer intends to exit its stake in Elanco over time.
“This transaction enhances our focus as a global leader in life sciences,” said Werner Baumann, Chairman of the Board of Management of Bayer AG.
The company had previously announced the divestiture of its Consumer Health brands Coppertone™ and Dr. Scholl’s™ along with the sale of its 60-percent stake in German site services provider Currenta.
“We are therefore delivering ahead of schedule on one of the key priorities for driving value creation that we communicated at our Capital Markets Day in December 2018”, said Baumann.
“I have tremendous respect for the Bayer Animal Health team and their shared passion for improving the health and well-being of animals,” said Jeffrey N. Simmons, president and chief executive officer of Elanco.
“Combining Elanco’s strong relationship with veterinarians and Bayer’s leadership in retail and e-commerce will ultimately benefit all our customers.
“We look forward to joining our complementary portfolios and capabilities to build a fully focused animal health company, providing a sustained flow of innovation for farmers, veterinarians and pet owners.”
Bayer’s Animal Health business is seen as a global leader in the segment with sales of $1.8 billion in fiscal 2018
It develops and markets innovative products and solutions to prevent and treat diseases in companion and farm animals.
